Business managers have a poor understanding of what technology to invest in and how to use it. Technology use alone doesn’t lead to growth in a business but simple technology focused on solving customers’ problems is key.
Our new research looked at 11 firms with high growth (turnover growth of more than 20% per year for three to five years) in Queensland.
The study featured interviews with 17 owners and CEOs of firms who were asked about their business model and the role technology plays in explaining their growth.
It showed that businesses are successful when technology is combined with human and organisational capabilities to deliver value and solve a problem for the customer.
Where businesses get it wrong
The Reserve Bank of Australia (RBA) noted a decline in business investment when it cut the cash rate to 1.5%. Overall, gross investment in all sectors decreased 3.4% annually in 2014-15, following a decline of 1.29% annually in 2013-14.
While this decline is largely attributed to the decline in growth of investment in machinery and equipment, technology investment also declined, especially investment in electrical and electronic equipment (-4.33% in 2014-15 and -9.17% in 2013-14).
Research shows a poor connection between technology investment and productivity in Australia. The graph below shows the slow growth path of investment in the economy in recent years.
Technology investment growth. Author supplied, Author provided
Instead of just investing in new technologies, businesses should be focused on using existing technologies more effectively.
Prior research indicates that managers often make poor decisions when it comes to technology, as they fail to gauge the true benefits that can be generated from such investment. They often feel the pressure of being left behind by the rapid pace of technology advancement and therefore decide to go with new technology as an all-out solution.
However, technology investment can’t generate any advantage unless there is an overall business strategy in place that integrates technology across the business in the delivery of value to customers. Instead of just investing in new technologies, businesses should be focused on building skills and using existing technologies more effectively.
How businesses should use technology
Our research found that the firms studied succeeded by using technology platforms to solve a customer problem and having data drive other business decisions.
For example, one firm with customers in regional and remote Queensland installed solar energy systems with the capacity to go “off grid” using battery technology.
Real time data enabled them to keep their customers informed of the operations of their system and resolve any issues before they became apparent. The firm knew more about the real-time performance of the energy system than the customer.
Another business built a user library based on the information customers shared with them in digital form. This enabled firms across industries and countries to learn from one another.
Many of the businesses used similar technologies that are widely available and easily accessible such as websites, blogs, online ordering and sales, social media and document sharing. The technology itself was not the essence of high growth, but its use provided data that could inform business decisions.
The research found that in order to embrace opportunities for growth, businesses should remember:
* to stay focused on their customers and solving their problems
* to use technology across their business models
* that technology they use does not have to be complicated
* to incentivise creativity and build technical capabilities surrounding the technology
Our research showed technology investment should not be made independently; rather it should follow the overall business strategy. Instead of relying on technology, businesses should use their human resources to ensure technology underpins success.
Businesses need to get smarter when investing in tech is republished with permission from The Conversation